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2013 Supreme(Del) 1400
High Court of Delhi
JAYANT NATH, J.
Somendra Nath Deka
Versus
The Chairman-Cum-Managing Director NBCC & Another
I.A. No. 4583 of 2013 in CS(OS) 524 of 2013
Decided on : 24-10-2013
For the Plaintiff:Rana Ranjit Singh, Advocate.
For the Defendants:D1, Abir Phukan, Ms. Iram Hassan, Advocates.
The importance of contractual obligations, compliance with contract conditions, and the need for evidence to support claims in contract disputes.
Headnote:
Bank Guarantee - Contract Dispute - Clause 7.1 of the Letter of Award, Clause 2 of the General Conditions of Contract - The court discussed the bank guarantee issued by defendant No.2, the correspondence between the parties, and the plaintiff's claim of insurgency problems affecting the contract. The court highlighted the importance of time as per Clause 7.1, the plaintiff's failure to comply with Clause 2 of the General Conditions of Contract, and the lack of evidence supporting the plaintiff's claims.
Fact of the Case:
The plaintiff, a contractor, sought injunction against encashment of a performance bank guarantee issued for a construction project. The plaintiff claimed inability to complete the work due to insurgency problems, while the defendant denied the contentions.
Finding of the Court:
The court found that the plaintiff's claim of insurgency problems was not adequately supported by evidence and was likely an excuse for non-performance. The court highlighted the importance of time as per the contract and the plaintiff's failure to comply with contractual conditions.
Issues: Dispute over the plaintiff's claim of insurgency problems affecting the contract, and the validity of the bank guarantee.
Ratio Decidendi: The court emphasized the contractual obligations regarding time and the plaintiff's failure to comply with site assessment requirements. The lack of evidence supporting the plaintiff's claims led the court to dismiss the injunction application.
Final Decision: The court dismissed the injunction application, stating that the plaintiff's contentions lacked merit and evidence. The observations made were specific to the injunction application and did not prevent parties from presenting their contentions at the final adjudication.
Jayant Nath, J.
1. This is an application under Order 39 Rule 1 and 2 seeking injunction against encashment of performance bank guarantee for Rs. 49,27,896/- issued by defendant No.2 at the behest of the plaintiff in favour of defendant No.1.This application came up for hearing before the Court on 18.3.2013 when an ex parte order was passed restraining defendant No.1 from invoking the Bank Guarantee in question.
2. It is contended by the plaintiff in the plaint that the plaintiff is a class- I (A) Contractor of PWD roads and buildings of the State Government. An advertisement was stated to be issued on 23.01.2010 by defendant No.1 for proposed housing for urban poor and rehabilitation of slum dwellers at William Nagar (East Garo Hills) Meghalaya under Integrated Housing and Slum Development Programme of the Government of Meghalaya. The plaintiff made a bid. The tender bid dated 30.01.2010 of the plaintiff was approved by defendant No.1 and the work of contract value of Rs.9,85,57,921.15/-was awarded to the plaintiff vide Letter of Award dated 07.06.2010. As per clause 13.1 of the Letter of Award /Letter of Intent, the plaintiff was to submit to NBCC a performance bank guarantee of any Nationalised Bank equivalent to 5% of contract value. Hence, the plaintiff furnished the bank guarantee of Rs.49,27,896/- in favour of defendant No.1 issued by IDBI Bank-defendant No.2.
3. The plaintiff claims that he started the work as per the terms and conditions of the Contract Agreement. The site was handed over to the plaintiff on 21.06.2010. It is contended by the plaintiff that in December 2010 there were insurgency problems in the area. It is claimed that the plaintiff went underground in March 2011. Reliance is placed on various communications written by the plaintiff to defendant No.1 pointing out the insurgency problems. It is stated that despite due intimation to defendant No.1 about the insurgency problems, defendant No.1 is completely ignoring the problem. Vide letter dated 10th July,2012 the plaintiff has stated that in the facts and circumstances of the case given the ground realities, the plaintiff despite earnest endeavour could not complete the work and had to spend huge amount of money keeping in view the anti social activities including murder, extortion going around in the area. The plaintiff submitted that defendant No.1 may pass an appropriate order to absolve the plaintiff from the responsibilities of completing the work on no conditions. It is pointed out that despite the above on 17.01.2013, defendant No.1 sent a 15 days’ notice to remedy the default by speeding up the wok and by proceeding with the work with due diligence failing which defendant No.1 has stated that it will be at liberty to determine the contract. Hence, the plaintiff has filed the present suit seeking, apart from other relief, a decree of declaration that the disruption in execution of the Contract dated 10.06.2010 on account of insurgent activities be not treated as nonperformance. Present application for stay of encashment of Bank Guarantee is also filed.
4. The defendants have in their written statement denied the contentions and submissions of the plaintiff. It is contended that the Letter of Award envisaged that the project was to be completed within 12 months. Reliance is placed on Clause 7 of the Letter of Award which stipulates that time is the essence of the Contract and the project should be completed within 12 months. It is also pointed out that a perusal of the various communications written by defendant No.1 will show that the problem regarding insurgency is only an excuse for not being able to execute the contract. Reliance is placed on letter dated 18.12.2010 written by the plaintiff where the only complaint of the plaintiff was regarding non-availability of certain type of steel. Similarly, reliance is placed on letter dated 24.08.2011 written by the plaintiff to defendant No.1 where it is stated that the work could not be
